A long standoff over broker transparency between one woman and TQL has culminated in a civil lawsuit filed in the U.S. District Court of the District of Columbia demanding the mega broker comply with 49 CFR 371.3 and drop its contractual waivers.
The move follows the recent release of a document requested under the Freedom of Information Act showing a representative from the Federal Motor Carrier Safety Administration in November 2023 telling TQL to hand over the required transparency documentation of a single load of ice cream moved by Dakota Springfields, then trucking with authority as Pink Cheetah Express. The FMCSA rep told TQL to "ensure compliance" with regulations and remove a contract clause asking carriers to waive their rights to transparency under 49 CFR 371.3, saying the clause could be a violation of U.S. regulatory code.
TQL appears to have disagreed with the assessment -- as of Overdrive's last reporting on this subject, TQL's carrier contract still features a clause asking carriers to waive their right to review transaction records, aka broker transparency.
Springfields' lawsuit requests the court order TQL "to turn over ... all records, in an unredacted format, of any transaction that has taken place between the Plaintiff and the Defendant" including "any documentation, in unredacted form, between the Defendant and their original shipper client for all loads." TQL did eventually turn over documentation on one load, but Springfields sought further documentation on another 14.
The lawsuit asks the court to compel TQL to back off the contractual waivers, too, give Springfields the transparency documentation on the other 14 loads she hauled, and pay her legal fees and any other money the court deems appropriate.
Laurence Socci, Springfields' attorney, issued a statement saying that Springfields "stepped up today and answered the call to bring an end to the long-time abuse of independent truckers and small motor carriers by one of the biggest freight brokers in America." He contended the contractual rights waivers "are indeed unlawful, as they do evade regulation and unreasonably restrain trade."
Overdrive contacted TQL for comment on the lawsuit, but has not heard back.
Download the text of the suit in full via this link.
The text of the lawsuit describes how a January 18, 2023, spot load of ice cream turned into a complicated saga after Springfields requested transparency and TQL refused.
The lawsuit quotes 49 CFR 371.3(c), "which states in relevant part: 'Each party to a brokered transaction has the right to review the record of the transaction required to be kept under these rules.'" It goes to assert that TQL "does not have the right to deregulate itself in contracts because there is no Federal law that permits property brokers and motor carriers to waive Federal regulations."
Echoing FMCSA's own suggestion about the waivers, the lawsuit says TQL may have violated 49 U.S. Code § 14906, rules pertaining to the "Evasion of regulation of carriers and brokers." Violations of the code can come with a $2,000 fine for the first offense, and $5,000 for subsequent offenses.
The waiver "was void and unenforceable under the Sherman Antitrust Act as a matter of unreasonable restraint of trade," the suit further asserts, citing 15 USC §1.
The "Factual Allegations" section of the filed suit also sheds some light on the idea, dismissed by FMCSA at the time the Pink Cheetah/TQL story was first reported, that the agency ever planned to "raid" TQL.
According to the suit, "On November 29,2023," the day before FMCSA told TQL to hand over the transparency documents and drop the contract clause, an FMCSA official called Springfields "and told her" TQL was "refusing to turn over the requested documentation to USDOT until they talk with their legal department and the FMCSA Ohio Field Office would be paying a visit to Plaintiff's office the following day to seize the records if they didn't respond."
The next day, TQL did hand over the documentation. According to the lawsuit, "It is unclear if the planned visit took place." The load transaction records revealed, according to the lawsuit, that TQL took a 44% margin on that load. (DAT's Ken Adamo points out that despite the wide margin, Springfields' per-mile rate was actually pretty good, about 25% higher than the average at the time.)
[Related: Broker margins, rates data, transparency: What owner-operators really think]
Can brokers make carriers waive a right codified in regulation? The suit argues the answer is a solid no. The lawsuit cites a passage from FMCSA's recent notice of proposed rulemaking on broker transparency, where the agency notes carriers and shippers both can require certain rights and remedies be waived in contract terms, yet asserts that the statute enabling them doesn't apply to brokers.
An FMCSA representative recently pointed to its transparency proposal as being the agency's updated stance on the matter overall when it comes to transparency -- the proposal would make it a duty for brokers to provide transaction records, shifting the burden of obligation to them, rather than a right of carriers. In the proposal, FMCSA says it does not think it has the authority to out-and-out ban contract waivers.
The lawsuit puts the question of broker transparency enforcement, at least in the case of Pink Cheetah, in the court's hands.
It cites a legal precedent laid out in a case called Taylor Energy Co. LLC v. United States as saying "a regulated entity must adhere to the regulations and cannot 'disguise its regulatory obligations as contractual ones.'"
The Factual Allegations section of the lawsuit concludes by saying TQL "does not respect 49 CFR 371.3 transparency rights" and "continues to violate the order on a daily basis with respect to new motor carriers ... by including the unlawful waiver in order to deregulate itself and exploit motor carriers in need of loads to haul."
Interested readers can peruse the full text of the lawsuit in pdf form via this link.
